Buying in dying hour help benchmarks to keep their head above water

Key domestic benchmarks witnessed consolidation as investors opted to remain on sidelines amid growing anxiety over the outcome of US Federal Open Market Committee meeting later on June 19, 2013. Frontline gauges traded in red for most part of the session but buying which emerged in dying hours, largely supported by recovery in European markets after a sluggish start, mainly acted as saving grace for domestic equity markets and helped them to hold crucial 5,800 (Nifty) and 19,200 (Sensex) levels. Markets started the session in red in the absence of any positive trigger. Bourses extended their southward movement as sentiments got dampened with foreign institutional investors (FIIs) selling shares worth a net Rs 597.37 crore on June 18, 2013.

Weakness in Asian markets too dampened sentiments as investors opted to stay away from piling up positions in risky assets awaiting Federal Reserve to clarify the outlook on its massive stimulus when it ends a two-day policy meeting later in the day. Hong Kong benchmarks remained the top loser, declining by over a percent, while Shanghai Composite, Jakarta Composite, KOSPI Composite and Straits Times too witnessed a significant cut during the trade.

However, local benchmarks started paring losses in second half and managed to keep their head above water in the end as European markets, after a choppy opening, got their green terrain back as investors look to the US Federal Reserve for clues on how soon it may start to scale back its stimulus programme.

Back home, some support also came in after shares of frontline non-banking finance companies (NBFCs) like Mahindra and Mahindra Financial Services, Bajaj Finserv, Reliance Capital, L&T Finance Holdings rallied up to 8 percent in anticipation of getting banking licenses. Meanwhile, telecom stocks also rang loud after TRAI had allowed telecom service providers the option of either charging a flat upfront fee or rates set by TRAI, for roaming services. Additionally, aviation stocks rallied with Jet Air India, Spicejet and Global Vectra edged higher in early deals on reports that a government panel has recommended allowing complete foreign ownership of aviation companies.

However, up-side remain capped as some pressure came in from selling in selected stocks from power and FMCG counters as heavy rains may affect the paddy crop in North India, while in the hill states of Uttarakhand and Himachal Pradesh it is disrupting electricity generation at hydropower projects.

The NSE’s 50-share broadly followed index Nifty gained by just eight points to hold its psychological 5,800 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over twenty points to finish over its psychological 19,200 mark.

Moreover, the broader markets outperformed benchmarks and ended the session with a gain of over half a percent. The market breadth remained in favor of advances as there were 1,261 shares on the gaining side against 1,113 shares on the losing side while 145 shares remain unchanged.

Finally, the BSE Sensex gained 22.42 points or 0.12% to settle at 19,245.70, while the CNX Nifty rose by 8.65 points or 0.15% to end at 5,822.25.

The BSE Sensex touched a high and a low of 19,274.26 and 19,100.13, respectively. The BSE Mid cap index up by 0.53% and Small cap index was up by 0.50%.

The top gainers on the Sensex were, Bharti Airtel up by 2.83%, Hindalco Industries up by 2.66%, Sterlite Industries up 2.65%, Jindal Steel up 2.52% and Tata Steel up by 2.05%, while Tata Motors down by 1.80%, Dr Reddys Lab down 1.55%, NTPC down 1.39%, TCS down 1.33% and Hero MotoCorp down by 1.26% were the top losers on the index. 

The only gainers on the BSE Sectoral space were, Consumer Durables up 1.96%, Metal up 1.28%, Realty up 0.58%, Oil & Gas up 0.56% and Teck up 0.26%, while Auto down 0.67%, Power down 0.59%, PSU down 0.35%, Health Care down 0.29% and IT down 0.27% were the top losers on the sectoral space.

Meanwhile, in a move to attract more capital flows and tide over the Current Account Deficit (CAD) woes along with bolstering the rupee, a government panel, headed by economic affairs Secretary Arvind Mayaram, has proposed raising FDI cap in a number of sectors, including non-scheduled air transport, ground handling at airports, satellites, private security agencies and Internet Service Providers (ISPs).

The panel has suggested that the Foreign Direct Investment (FDI) ceiling in the defence sector be raised to 49% under the government approval route from 26% at present, while for the pharmaceuticals sector; the committee recommended 49% under automatic route as against 100% under the government approval route. The panel has also suggested raising the foreign direct investment (FDI) limit to 74% in multi-brand retail and allowing complete foreign ownership of telecom and aviation companies.

The panel has submitted the report to the Finance Ministry and now, the Department of Industrial Policy & Promotion (DIPP), the administrative ministry in charge of FDI policy, will consider the Mayaram Committee report to finalise the plan.

Foreign investment is considered crucial for economic development of a country and India has allowed FDI in most of the sectors through automatic route, but for certain sensitive sectors, FIPB clearance is required. For the fiscal 2012-13, FDI inflows recorded a decline of 38% to $22.42 billion compared to the $35.12 billion inflow in the previous year. Meanwhile, the government has been liberalizing the foreign investment policy to attract maximum foreign investment into the country.

The CNX Nifty touched a high and low of 5,828.40 and 5,777.90 respectively. 

The top gainers on the Nifty were Hindalco Industries up by 3.26%, Sesa Goa up 2.89%, Ambuja Cements up 2.54%, Bharti Airtel up 2.40% and Jindal Steel up by 2.33%.

On the flip side, the top losers of the index were, Tata Motors down 2.08%, Hero MotoCorp down 1.81%, Dr Reddy's Laboratories down 1.74%, UltraTech Cement down 1.66% and Tata Power down by 1.62%.

The European markets were trading mixed, France’s CAC 40 down by 0.23% and the United Kingdom’s FTSE 100 down by 0.24%, while Germany’s DAX up by 0.16%.

All the Asian equity indices, barring Japanese Nikkei, ended the Wednesday’s session in negative terrain as investors opted to stay away from piling up positions in risky assets awaiting Federal Reserve to clarify the outlook on its massive stimulus when it ends a two-day policy meeting later in the day. Hong Kong benchmarks remained the top loser, declining by over a percent, while Shanghai Composite, Jakarta Composite, KOSPI Composite and Straits Times too witnessed a significant cut during the trade. Bucking the trend, Japan’s Nikkei average hit a one-week high on Wednesday, with traders citing the launch of a near $780 million investment trust as a driving factor. Some support also came in with rally in exporters after the nation’s shipments increased and the yen weakened.